doombuggy

I just had a client ask me the same question. They have a former EE who wanted to roll her $218.29 401(k) pre-tax account balance into a Roth IRA. I will let him know that this former EE will need to take her money som other way. Thanks!

hahahahahahaha You made me look with the "I'm Stumped" topic. I never thought you'd be stumped........ I better go check mine quik since my birthday is coming up soon.....

The plan is a 401(k) Profit Sharing Plan. Yesterday we obtained more info on what some of the credits & debits were (the plan has assets in 2 accts with Blue Vase and 1 at SunTrust). The turstee used funds in this plan to purchase the lot, build a house, and last September, started renting it to a family, none of who are employed at the company (or rather PPA, it's a doc's office). It looks like a nice plan, and for $550/mo, I'd rent it, if it was around here. The plan is valued annually. It is trustee directed. We have had a great deal of difficulty getting this info. We have had to ask the client (actually, the broker) for info several times, and it trickles in. I am actually in the process of amending the 2004 5500, as that is when they started this whole mess and we just found out ("oh, you have 2 accts with Blue Vase? Please send us the statements for that one too") If we had an emoticon of "head bashing brick wall" I would insert it here................ I also found out yesterday that when they purchased the lot that started this thread, they also purchased another lot in the same town, probably had a home built on that one too, but sold it for a profit in December 2004. We were just trying to get some additional info off of the county appraiser's web site, but they are not as savvy in that state as they are around here in Central FL. We are just going to have to run with what we have. As my old boss used to say, "We aren't the Pension Police!" We have told the broker that we felt the property that they are renting out (which is held as an asset of the plan, not to one specific person) needs to be appraised each year by an independent appraiser. Thanks for your input guys & gals! If anything else in this crazy story comes up, you'll hear about it......

OK, this 401(k) Profit Sharing plan purchased some land in 2004, built a house and started renting it out in September of last year. The rental payments go into the plan's account, i have no problem with that part. Since it is real estate, it doesn't get assessed every year. Does the plan sponsor need to have the property appraised at the end of every plan year? I see that the plan sponsor w/d the taxes for the property ffrom the plan's account. I am ok with that part. The client's advisors sent me a copy of the lease and what looks like info from the county property appraiser's books (which you can get online, something I learned last year when I tried to buy a home). Is the county appraiser's value ok to use? I think the answer is no? Thanks for your help!

OK, I could swear that I terminated this plan, but I am wrong. First I amended the plan to a 0% formula; then the MPP was merged with the PS plan effecctive at the end of business on 7/15/05. This is what prompted me to enclourage the client to keep the moneys in seperate accounts, just retitle the MPP accounts. So, b/c we are able to have seperate sources in Datair, the PS $ is NOT subject to J&S, even though the money for the PS & MP are pooled together in each participant's indivdual account? I have had plenty of clients with PSPs, and a few with MPPs, but none with both, so I am being careful. Thanks for your help!

I have a client that had two seperate plans - a Money Purchase and a Profit Sharing Plan. They elected in July 2005 to amend the MPP to have a 0% formula and terminate. There are two participants in each plan (the same two). They each have an individual account at AG Edwards for each plan. We had advised them to keep both accounts open (one that was the MPP money and the other that was the PSP money) at AG Edwards; we would roll the MPP into the PSP and leave the sources segregated (so now the PSP has two sources - PS and Old MP). The segregated MP $ would be subject to the J&S rules, but the PS $ would not. Well, I have just discovered that in February of this year, this client closed each of the MP accounts and rolled them into each PS account. So the PS and MP money has been mingled at AG Edwards, but I am still tracking it seperate in our software system. Would the PS money be subject to the J&S rules? Thanks for your opinions!

Thanks for the feedback; I have passed this on to the investment advisor who asked me. I guess JanetM & I both like kitties. My new kitty looks like the one in the avitar, so...... but he's a licker (worse than a dog) and he likes to sit up on his hind legs, which is why he's like the gopher in "Caddyshack." And yes, Tom, FL is the land of hot humid summers, AND I heard on the news over the weekend that when you factor in the heat & humidy, Orlando is the #3 hottest place in the US, behind Miami (#1) and some other place in #2. Boy did I pick the wrong place to live! Thanks again, folks!

Anybody know if this has come out yet? I have a client asking me, since they are an off plan year. I am thinking the answer is that we won't hear until the fall, but I wanted to make sure......

We found out this morning that he died on 2/6/06. I will note in the files that if the accounts are not distributed to the bene or benes by the end of November an RMD needs to be processed to said bene from each account. Thanks for your help!

I just received word that the owner of tow of my plans has passed away. I knew he was sick, but did not realize how bad. He had been getting an RMD from each company's plans, as he was a more than 5% owner. At Company A, he and his wife are the owners. In Company C, he and another person are the owners. I don't know if his wife is his designated beneficiary for his ownership in either or both companies, nor do I know if his wife is his bene for his plan accounts (the client keeps copies of the enrollment forms), but for my quesiton, I will assume that the wife gets it all. The document states that a distribiton due to death may be processed as soon as administratively feasible after death. The plan is with American Funds. If the accounts of the dec'd owner are not distributed before the end of the year, does an RMD need to be processed? I have been doing RMDs for 10 years, but never had this problem. Thanks!

That thread was about a different client, not the one mentioned above. We just found out about this one yesterday. I'll pass your thoughts along, however. Thanks!

A company that we provide TPA services to for their safe harbor 401(k) plan has been purchased by another company, which has a SIMPLE. Some people have deferred (I am assuming into their respective plans) for the current year. The question I am being asked is can the SIMPLE be dropped and the SH 401(k) plan be adopted for everyone? What about new hires? These issues were apparently not addressed by the merger/acquisition lawyer that they used. My boss (who asked me to post this) knows that they can merge on 1/1/07, but she is concerned about this year. The TPA firm that I used to work for was originally bought out in January, 2003, and we were required to stop contributing to our SH 401(k) as of the date of aquisition. We were then allowed to enter the purchaing company's 401(k) plan on the next quarterly entry date (which was 4/1/03). I would think that the answer to my boss' question above would be similar to the experience I had in 2003, but since I have never worked with SIMPLEs, I wanted to get some opinions. Any thoughts? Thanks for your help.

You might want to contact Relius support for help. While I don't use Relius anymore, I always found their support staff to be very helpful.

Here is a question a client has posed to me: i know buying the property in my 401(k) requires an annual appraisal be done, is that also true if land is purchased in an ira? I deal with 401(k)s, profit sharing plans and money purchase plans, but not IRAs. While I have one myself, it is made up of stocks and mutual funds. Does anyone know the answer to this question? Many thanks!

My boss just asked me to post this here: We have a new client that has an existing SIMPLE-IRA plan. The client provided the needed notification prior to the 60 day deadline. Subsequent to that notification, they decided to implement a 401k plan. The financial institution told them they have to wait for 2 1/2 months before they can do this. They did not provide a cite and I couldn't locate anything in Sal's book [The ERISA Outline Book] that indicates this limitation exists. Here's what they want to do: 1 Stop contributions to the SIMPLE-IRA effective 12/31/05. 2. Start a new 401k plan effective 1/1/06. Can this be done? Any thoughts? Thanks for the help!

I have a pye of 9/30/05. Employer makes the required 3% SH non-elective contribuiton and is interested in making a P/S contribution. It is cross tested with him in Class A (shareholders0 and everyone else in Class B (staff). He deferred $16,500 (no one else deferred). I guess my question is whcih limit is the annual additon for the 9/30/05 PYE? $41k, since teh plan year begins in 2004, or $42k, as the plan ends in 2005? I can't seem to find an answer - this is a takeover plan and the document seems incomplete. Any thoughts?

I used to have a plan that allowed for deferrals, had a match (I forget at what percent), gave profit sharing, and then elected the SH non-elective when that became avaliable. They did the required match contribution and SH each pay period, and then did a discretionary P/S at the end of the year. We used a Corbel doc for that one with no problems - probably b/c the P/S was discretionary. In the end, the company went out of business......

Hey, Brenda: My thought would be that since the participant did not pay taxes on the amount being refunded (so to speak) that you would use whatever dist. code applied and indicate that no taxes were paid in box 4. The only hole in that theory is that the partiicpant should not be penalized for the employer's mistake. I just looked over my distribuiton code list that I printed out from Relius before I left PA and I can't find anything else that would fit. When I left PA, Susq did not take any deferrals out of my last pay check. It is my understanding, however, that this may change in the future. I sure felt cheated when I got that check (and I am still not eligible for the plan here). Good luck with your problem and take it easy! Jesse EDIT: I was just telling my boss, Jeff, about your question and his answer was this: It's not a distributable event, so there would be no 1099. The company would need to refund the participant out of the comapny funds (assuming that the errored $$ was already paid to the plan), paying the federal and/or state taxes at that time. Whatever money was paid to the plan in error would be credited towards future er contribuitons to the plan. I fell like something similar happend to me while we were at PB/PA. This might not be the answer that you are looking for, but it might be your best choice. Jeff has been in the business for quite awhile (he's from Delaware) and I always feel comfortable with his answers (not like some other people we know). Good luck!

A plan we have apparently has an employee who has been with the employer for 11 years, and has gone from being a full time staff person to an independent contractor who works 24 hours a week most of the year, except for 40hr/wk from mid-January to mid-April. The plan document is one of Datair's mass-submitter prototype non-standardized safe harbor docs, and only excludes union and non-resident aliens. The client thinks that she is no longer eligible to participate and should be paid out. She became an independent contractor in mid-2004, so the W-2 I have for her might only be for the first 8 months of the year (I am not sure). I definately beleive she cannot be paid out, but I am not so sure about the elig. part. Would it depend on the fact that she may be W-2 or 1099? Thoughts? Thanks for your help!

I spoke with one of our other clients, which is a law firm, and they sida they had the same situation before. They just reported the participant as a "d" on the next year's SSA. The client has provided us with info back to 1992 which illistrates that the woman was paid out. The ex-participant is just looking for more money, all these years later..... Thanks!

I just got a call from a client who has a copy of a letter taht the SSA sent to a former ee of the plan. The SSA told her she MAY have $550 in this plan. We have been the TPA since 2002 and have no record of this ee (she term'd in 1991). My guess is that she was put on the SSA the first go around as an "A" and then never put on again as a "D" when she was paid out. If memory serves, when we were doing the C/R forms, we still had this SSA schedule. What do we need to do to report to the SSA that this former ee no longer has benefits in this plan? I do not have a copy of the letter at this time, and we are working with the client to get valuations from the 1990s (free erisa had 5500s available back to 2000). Thanks for the help.

This question was posed to me today: Re: Changing the Vesting Schedule You would not be able to keep the prior vesting schedule for the monies deposited before their desired vesting schedule change, while having monies deposited after this change subject to a differing vesting schedule. Since you are proposing an accelerated vesting schedule, we needn't be concerned with protecting a participant's vesting percentage as required per IRC §411(a)(10)(A). However, the IRS interpretation of IRC §411(a)(10)(A) can be used to help explain why you can't have 2 vesting schedules apply to the same contribution(s). The IRS interprets the code to indicate a participant's vesting percentage rather than account balance must be protected in the event of a vesting schedule change. It would stand to reason then that the IRS would view a change to the vesting schedule as applying to ALL contributions (rather than just the contributions after the effective date of the change) since the participant is now 100% vested. What we are saying is if you changed to a 100% immediate vesting schedule, you would need to apply this to all monies--not just new funds. I think the question being posed to my office is that this is employer money that is currently on a six year graded schedule, and as of 1/1/06, the company wants to change the schedule to 100% immediate, but only to moneys that go into the plan after 1/1/06. So all er money in the plan before 1/1/06 would stay at the old schedule. We are contacting Datair to see if the plan doc allows for this crazyness, but if it does, I would imagine that the monies would need to be segregated. My boss just told me that this is a 401(k) Profit Sharing plan, but we are not sure if the source in discussion is P/S or match. Thanks for your thoughts and opinions!

I completed the 2004 annual val for a small plan that uses the prior year testing method. We told the administrator that the sole HCE will need to keep his deferral percentage at 4.71% or less in order to pass the test for 2005. Apparently, he has already contributed that much. We have told them to stop, but is there any way that he can take a correction now, in the 2005 year, or would he have to wait? I feel that it's too late, and I can't find anything in the Erisa Outline book that says he could take a refund now. Any thoughts? Thanks!

I have one of these books from 1998, and I was talking to my current employer about this book yesterday. she emailed me today, asking "where can we order these?" and I cannot find this book anywhere. The edition I have was published in 1997 by Investors Press, Inc. Does anyone know where I can get some of these books? There are some clients who really need to have these! When I worked at BISYS Plan Services, we used to give them out to clients (they also had the BISYS logo on them).

Thanks, guys. I will give this a try and get him a check.